‘With Hungary and Poland vetoing the EU budget and Covid recovery fund, the case for issuing perpetual bonds has never been stronger
‘Perpetual bonds offer the great advantage that the principal never has to be repaid; only the annual interest is due. The discounted present value of future interest payments diminishes over time – it will approach, but never reach, zero. A certain amount of financial resources – say, the €1.8tn currently planned – would go several times further if it were used to issue perpetual bonds rather than ordinary bonds. This would largely solve Europe’s financial problems.
‘If one country issued perpetual bonds, it would have the additional advantage that other European countries would find it an example worth following. The Frugal Five should find perpetual bonds particularly attractive. After all, they like to save money.’
Read here (The Guardian, Dec 1, 2020)
